Should you’re one of many thousands and thousands of viewers patiently ready for the most recent episode of HBO’s Succession to air on Sunday, don’t fear — now we have some real-life boardroom drama to tide us over within the meantime.
The aforementioned drama is unfolding at Cano Well being, a senior-focused major care supplier that went public in 2021 by means of a $4.4 billion SPAC merger. Final week, three of the corporate’s board members resigned in protest of Cano’s governance technique. Additionally they introduced they’ll type a bunch to enact complete adjustments at Cano, together with changing the CEO.
The Miami-based firm’s inventory has dropped 80% over the previous 12 months. Final Friday, it plummeted to beneath $1 per share following a blistering press launch issued by Barry Sternlicht. He’s the billionaire CEO of Starwood Capital Group and was an early investor in Cano.
Within the press launch, Sternlicht introduced his resignation from the board and expressed that he has been “extraordinarily troubled” by the corporate’s “poor working selections and efficiency” over the previous two years.
He identified that Cano had acquired about $1.49 billion in gross proceeds when it went public, and people proceeds included about $800 million from personal placement traders together with himself, in addition to blue chip traders like Constancy, Third Level Capital, Maverick Ventures, BlackRock and Owl Creek Companions.
“Quick ahead to at present, this administration workforce has expended almost all this money and the corporate has not loved any demonstrable enchancment in its core profitability,” Sternlicht wrote.
Cano’s governance construction has prompted the corporate’s inventory value “to be decimated, dropping over 90% from its debut,” Sternlicht added. He additionally lamented that the corporate is “now saddled with a crippling debt burden.”
Sternlicht wrote that he had immediately communicated his considerations to his fellow board members and Cano CEO Marlow Hernandez “on quite a few events,” solely to be ignored. He known as for Hernandez to be faraway from his place as chairman and CEO, calling his continued tenure “dangerous to the pursuits of stockholders and to Cano workers.”
Two different board members resigned together with Sternlicht — Elliot Cooperstone and Lewis Gold. Cooperstone is the founder and managing associate of personal fairness agency InTandem Capital Companions, and he beforehand served as CEO of Prodigy Well being Group, a well being plan providers firm that Aetna acquired in 2011. Gold is co-founder and chairman of the board at behavioral well being firm Superior Restoration Programs.
In a 13-D submitting with the Securities and Change Fee, Sternlicht stated that he, Cooperstone and Gold have entered into a bunch settlement wherein they plan to “act collectively to pursue change” at Cano, “together with, however not restricted to, the substitute of the CEO, sale of non-core property and enhancement of shareholder worth.”
Cano launched a assertion on Friday in response to its board members’ resignations. The corporate wrote that it’s “disillusioned that three administrators selected to resign as a consequence of what we consider is their focus solely on the quick time period.” Cano additionally wrote that it “strongly disagree[s] with their representations in regards to the firm and their evaluation of Dr. Hernandez’s efficiency.”
“Whereas we totally acknowledge the current disappointing share value efficiency, our work has supported our robust confidence within the firm’s mission and fundamentals, our dedication to driving operational and monetary enhancements and our perception within the firm’s persevering with prospects for long-term shareholder worth creation,” the corporate wrote.
Cano’s boardroom debacle comes amid a time wherein major care firms are ripe targets for acquisition. Lots of Cano’s rival firms had been lately acquired for billions of {dollars}.
For instance, Amazon introduced its plans to purchase One Medical for almost $4 billion final summer season, Walgreens‘ VillageMD purchased Summit Well being for almost $9 billion in January, and CVS disclosed its plans to amass Oak Avenue Well being for $10.6 billion in February.
Final 12 months, media studies emerged saying that Cano was an acquisition goal of CVS, however the retail pharmacy big ended up strolling away from the deal.
Within the coming months, it will likely be fascinating to observe whether or not Cano is ready to get its act collectively to turn into a extra engaging acquisition goal. If what its three former board members stated is true, the rehabilitation course of may take some time.
Picture: wenjin chen, Getty Pictures
